Japanese Firm Luring Investors With Nobel-Winning Technology

Shigeru Sato and Yuji Okada

April 18, 2013, 8:58 PM EDT

Retina Institute Japan K.K., which is employing Nobel Prize-winning stem-cell technology to treat eye diseases, plans to sell a stake in itself to a group of Japanese companies next month ahead of a possible initial public offering in five years.

The company, based in Fukuoka City, Japan, will raise 1 billion yen ($10.2 million) from the sale to fund development of a treatment for age-related macular degeneration -- a leading cause of blindness in the elderly -- using technology developed by Riken, Japan’s state-controlled research institute, Chief Executive Officer Hardy Kagimoto said in an interview.

After raising about 32 billion yen so far from investors, Retina is developing technology from a discovery that won Shinya Yamanaka, a professor at Kyoto University, the Nobel Prize for medicine in October. Yamanaka discovered a way to turn ordinary skin cells into what are called induced pluripotent stem, or iPS, cells.

“The development of retina treatment with iPS cells can lead to development of the cell-utilized therapies for a wide range of diseases,” said Akitsu Hotta, an assistant professor at Kyoto University who studies stem cells. Retina’s commercialization of the technology “will be a big milestone.”

Retina last month estimated the potential market for its treatments at $21 billion.

Clinical Trials

The sale of a 3 percent stake values Retina at 33 billion yen. Dainippon Sumitomo Pharma Co., which paid 1.5 billion yen for 5 percent of Retina, jumped as much as 8 percent in Tokyo trading the day after that deal was announced in March.

Shin Nippon Biomedical Laboratories Ltd., which said April 9 that it plans invest 300 million yen in Retina, jumped as much as 12 percent today. Tella Inc., which is buying 100 million yen of shares in the company, was up 7.4 percent. Both stocks have more than quadrupled over the past six months.

“Investors are rushing to buy shares of companies that are involved in stem-cell therapy and treatment technologies,” said Tsutomu Yamada, a Tokyo-based analyst at Kabu.com Securities Co.

Kagimoto, 36, declined to name the companies participating in the current round of fundraising and said he has no plans to sell shares to local or foreign private equity firms.

Retina is targeting an IPO in five years in Japan and the U.S. to finance commercialization of the treatment, said Kagimoto, who’s also a medical doctor. The company will conduct a clinical trial in Japan for treatment for age-related macular degeneration, and similar testing in the U.S., he said.

Yamanaka’s breakthrough, first announced at a meeting in Toronto in 2006, stunned the scientific world by showing that even as cells of the body age, they retain in latent form the unlimited potential they had as embryonic cells.

Researchers from Riken in January reported they have succeeded for the first time in creating cancer-specific immune system cells from iPS cells, the institute said in a Jan. 4 statement. This could potentially serve as cancer therapy in the future, Riken said.

“Advanced medical technologies around iPS cells would be one of Japan’s vital competitive edges in the next decade or two,” Kagimoto said.

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